Thin trading ahead of G7 meeting

The US Dollar traded in a firm range against its major counterparts after generally positive comments on the US economy by Federal Reserve Chief Greenspan in his senate testimony last night.

Greenspan in his speech said that the US economy is on a firm footing and inflation remains contained relieving some fears of a slowdown in the economy. On a less positive note, he expressed concern on the burgeoning current account deficit.

Players would prefer the sidelines ahead of important US trade data release later today. The trade deficit figure is expected to widen to $58 billion in April from $55 billion in the previous month.

Participants would also closely watch the G7 meeting this weekend for fresh directions.

Outlook for the day
EUR/USD - Euro is expected to trade in a range ahead of US monthly trade data. Expected range 1.2175-1.2300.
GBP/USD GBP too would trade in a confined 1.8150-1.8250 range.
USD/JPY After breaking 107.50, USD/Yen may further inch higher to 108.00 levels. Expected range 107.00-108.00.

euro continues to slip

The US Dollar gained broadly against the majors, pushing the Euro near 1.2200 in a technically driven trade.
The Dollar's gains were also boosted by a strong foreign investor participation in the USD 14 million auction of 5-year treasury notes, which eased some of the worries of a receding foreign interest in US assets.
Euro's losses were compounded by comments from an ECB governing board member that Eurozone Q2 growth will slow to around 0.3% from 0.5% in Q1.
Meanwhile in a data release this morning, Japan's current account surplus rose unexpectedly in April to Yen1.627 trillion against forecasts of Yen1.579 trillion but lower than previous Yen1.851 trillion.
Players would keenly analyse US Fed Chief Greenspan's testimony later in the day for fresh clues on the health of US economy.

Outlook for the day
EUR/USD - After a technical fall yesterday, the upside for the day would be capped near 1.2300 and single currency is expected to trade in 1.2180-1.2300 levels.
GBP/USD GBP is expected to trade in 1.8200-1.8300 range.
USD/JPY USD/Yen is expected to test the resistance at 107.50 and then possibly 108.00 levels. Support near 106.75 has strengthened its position.

Sterling up on dollar weakness

The US Dollar extended its downward correction against the majors yesterday after Federal Reserve Chief Greenspan expressed concern on the decline in long-term interest rates, which traders interpreted as a sign of possible slowdown of the US economy.
The Yen benefited from renewed Chinese revaluation talks ahead of upcoming G7 meeting. Governor of The People's Bank of China expressed his commitment on bringing about a change in China's currency regime but also reiterated that it could take some time.
Meanwhile, the Euro steadied after ECB President Trichet eased concerns of an imminent rate cut in the Eurozone. GBP witnessed the most noticeable movement as it quickly raced higher after breaching 1.8300 levels.

Outlook for the day
EUR/USD - Euro's corrective rally is facing tough resistance in narrow 1.2340-1.2400 area. Expected range 1.2250-1.2350.
GBP/USD - GBP's corrective rally is also facing tough technical barriers at 1.8400 and 1.8450. Expected range today 1.8300-1.8400.
USD/JPY - Yen is expected to trade in 106.50-107.50 range with a slightly weaker bias.

Currency converters switch to the far east

In the absence of any significant data release, the US Dollar slipped against most of its major counterparts yesterday.
Traders preferred to book some profits (on Dollar longs) ahead of Greenspan's senate testimony and important US trade deficit data later in the week.
However the movement in the Yen was most significant as Japanese currency hit a 3-week high against the Dollar aided by news that Japan's Q1 corporate capital investment rose by 7.4% on year.
In his speech, Federal Reserve Chairman Greenspan again reiterated that China should loosen its fixed exchange rate system and that such a change would be in China's interest. The speech assumes importance as it is addressing a group of Central bankers in Beijing.

Outlook for the day
EUR/USD - Euro is expected to trade in 1.2200-1.2300 range today.
GBP/USD - After defending 1.8100 levels for a while, a temporary bout of correction towards 1.8300 is not ruled out.
USD/JPY - After rallying in last two trading sessions, Yen is expected to move a bit more forward before any profit taking. Expected range 106.25-107.25.

euro weakens on breakup talk

The US Dollar held on to its gains ending the week higher against its major counterparts despite a weaker US non-farm payrolls data release on Friday.
The Dollar briefly weakened as Euro crossed the 1.2300 mark after US non farm payrolls rose only by 78k, its lowest in 21 months against expectations of a 180k increase, but recovered soon after as the buoyant technical sentiment outweighed the negative important economic data release.
US May jobless rate fell to 5.1% against 5.2% in April while US average hourly earnings increased by 0.2% in May against 0.3% in the previous month.
US April Trade deficit figure and testimony by Federal Reserve Chairman Greenspan are the key events scheduled later this week which are expected to influence the currency markets significantly.

Outlook for the day
EUR/USD - Euro is expected to trade in 1.2200-1.2300 range with a slightly weaker bias. Correction towards 1.2300 and beyond should be seen as selling opportunity.
GBP/USD GBP too is expected to trade in 1.8100-1.8250 range.
USD/JPY Yen is expected to trade in 107.00-108.00 and seeking fresh directions.